Roberto Pocaterra Allen ||//

STILL THE KING OF THE WORLD

The BP statistical review of world energy tells us that of the three fossil fuels (oil, coal and natural gas), oil remains king. The world gets 33 per cent of its energy from oil, 29 per cent from coal and 24 per cent from natural gas.

The three collectively account for 86 per cent of global energy consumption and remain the basis of modern civilisation.

Many ?experts? like to forecast the oil price. No one has ever been totally successful at doing that. There are simply too many variables to consider and information is never perfect.

There is supply, demand, geopolitics, market sentiment, weather and the strength of the US dollar.

That massive increase in a five-year period was almost totally due to shale oil production from places like North Dakota.

Last November, the Saudi?s and OPEC blinked and announced they would cut 1.2 million barrels per day from their output.

That signalled that the shale producers of the USA had won the war of attrition.

The falling price of the last two years saw drilling rig related activity fall in the United States.

Recently with the oil price back in the fifties, the intrepid shale oil producers have started to increase investment and rig count is rising.

The bottom line is as oil prices recover into the mid 50?s US shale oil production will recover and this will again over supply the market.

The good news (for those countries that like high oil prices) is demand is linear and will continue to increase as long as the world population continues to increase and more and more people in India and China move into the middle class.